Personnel uncertainty persists at MetroHealth

System needs clarity at top to beat challenges it faces
in short, long term

Dr. John Brennan's bombshell decision to renege on his commitment to take over as president and CEO of MetroHealth and instead stick with his current employer in New Jersey has left the health system subsidized by Cuyahoga County in a bind.
MetroHealth has been peppered by executive turnover in recent years, particularly in the chief financial officer role — with two of the leading credit rating agencies taking a dim view of the revolving CFO door and the search for a new CEO in their lukewarm assessments of MetroHealth's finances within the last year.
And without a clear successor in sight for CEO Mark Moran, who announced roughly a year ago he would step down from the post when a new boss was named, uncertainty continues to swirl around the executive ranks of the hard-pressed health system as it looks to chart a sustainable course for the future.
The problem has intensified because of Mr. Moran's notice to MetroHealth's board last Monday, Dec. 3, that he will step down come Jan. 1, forcing the board to scramble for an interim leader until a permanent CEO is secured.
“Before we got to a place we were tempted to ask Mark to stick around, he let us know it's time to get on with the rest of his life,” said MetroHealth board chairman Ronald Fountain. “Mark's done more than anybody could have asked, and at this point, we spend the days now working through and vetting our options.”
While Dr. Fountain and other MetroHealth officials are confident they'll weather the storm left in Dr. Brennan's wake, health care observers say the protracted search for MetroHealth's next CEO won't come without its battle scars or, at the very least, a few bruises. And with hundreds of millions of dollars of construction in the pipeline, MetroHealth needs a clear leader in place if it's to execute the vision conceptualized under Mr. Moran's watch, these observers say.
“They need to have people in place focusing both on today and tomorrow,” said Tom Campanella, who directs Baldwin Wallace University's health care MBA program. “When you have interim leadership, it sort of has the potential of negatively impacting the culture of an organization, and people are not always sure which direction they're going.”

Who's in charge?

MetroHealth officials contend Dr. Brennan's startling Nov. 29 announcement that he'd remain president and CEO of Newark Beth Israel Medical Center and the Children's Hospital of New Jersey won't necessarily put MetroHealth behind schedule regarding its ambitious plan to build a handful of outpatient health centers and to pump up to $650 million into upgrading its aging main campus on West 25th Street in Cleveland by 2017.
Moreover, the lack of a clear leader won't impact MetroHealth's plans to implement its Medicaid waiver program. It's a complex legal tactic awaiting federal and state approval that has the potential to extend health insurance to as many as 30,000 people in Cuyahoga County who otherwise couldn't pay for their care ahead of the full implementation of health care reform.
“The new CEO will have to run like hell to get on that train,” Dr. Fountain said. “We are not stopping and sitting on the sideline waiting for a CEO to show up ... We are going to locate, recruit and attract a CEO that aligns, in general, with those objectives.”
Still, Bill Ryan, president of the Center for Health Affairs, an advocacy group representing local hospitals, indicated the uncertainty surrounding MetroHealth's administration could cause ratings agencies to raise their eyebrows when evaluating the large amount of new debt required to finance MetroHealth's expansive construction initiative. The problem, he said, is that the agencies would be asked to issue ratings “without knowing who the heck is running the place.”
Baldwin Wallace's Mr. Campanella noted that “if you put yourself in a position of an evaluator that effectively puts a stamp of approval on an organization's ability to pay for debt and make wise decisions, the first thing they're going to do is look at the people in charge.”
“It doesn't help — and I'm not going to say they'll do any downgrading — your case if you have a tenuous situation in the upper ranks of an organization,” he added.

Negative vibe

Fitch Ratings affirmed MetroHealth's A-minus long-term debt rating in June, but also revised its outlook for the rating to negative from stable. Fitch cited the deterioration in MetroHealth's operating performance and noted that the health system is poised to meet its 2012 budget targets mainly due to the layoffs it implemented late last year.
At the time of Fitch's initial rating in 2010, MetroHealth's management team was lauded for its strategic efforts to transform the organization, though the agency last summer said the turnover in management could be cause for concern.
Dr. Fountain brushed off those assertions, saying a permanent CEO would be in place well before the health system goes to the market to take on any new debt because MetroHealth still is planning how it wants to overhaul its aging facilities.
While Dr. Fountain wouldn't put a firm timetable on the renewed search to find a permanent successor for Mr. Moran, he said the process likely would take a few months — “less time than last time because we've already been through it once,” he added.

Inevitable comparison

MetroHealth launched the search for Mr. Moran's replacement last January, and search committee members said Dr. Brennan was the clear choice for several months prior to rolling him out as the system's next leader. The 14-member search committee that sized up 40 candidates put forth by a search firm, Witt Kiefer, whittled the list to eight — each of whom was interviewed this fall.
When Tom McDonald, the committee's chairman and a MetroHealth trustee, asked the search committee to rank those interviewed, Dr. Brennan came in first on all 14 ballots in the straw poll.
Dr. Fountain said the board still was sizing up how to proceed with the search, and the group met behind closed doors last week to discuss the matter. He said it would be natural for the search committee to compare candidates for the post to Dr. Brennan, who had a lengthy list of credentials that appeared to be a good fit for MetroHealth. Included on that list were his expertise in emergency medicine and his having turned around a financially strapped hospital.
“There are people who would probably do that because we are all human,” Dr. Fountain said of drawing comparisons to Dr. Brennan. “We will compare any candidate with what we saw and what we believed we knew about him.”
The comparison game can be somewhat of a disadvantage because it short-circuits evaluating candidates on their own merits, according to Greg Reynolds, the director of client development of Dise & Co, a Cleveland-based executive search firm.
“One of the dynamics of having your selected candidate pull the trigger not to come is that person becomes the barometer for everyone else you look at,” he said. “In the search world, that's one of the thing we hate the most.”

Mum's the word

MetroHealth has been tightlipped about identifying other candidates for the CEO post and wouldn't say whether they'd ask their second choice — if there was one at all — to consider an offer. Mr. Reynolds said he typically advises clients to go back to the drawing board and recruit a new slate of candidates.
After its involvement in a national search for about a year, Dr. Fountain said, MetroHealth's profile is as high as it's ever been.
“We're not going after somebody on the rebound,” he said. “We're going to find what we want.”